President Barack Obama signed legislation that will cut taxes and provide credit help for small businesses, calling it an essential step for job growth in a slow economy.
President Barack Obama signed legislation that will cut taxes and provide credit help for small businesses, calling it an essential step for job growth in a slow economy.
Small businesses “have borne the greatest brunt of this recession” because of lower demand from consumers and less available credit, Obama said.
The government “can’t create jobs to replace the millions that we lost in the recession, but it can create the conditions for small businesses to hire more people,” the president said at the signing ceremony in the East Room of the White House.
The bill, which got final congressional approval last week, was the fourth jobs measure to clear Congress this year and is likely the last before the midterm congressional elections. While the economy is slowly recovering from the longest recession since the 1930s, much of the rest of the year likely will be dominated by debate over whether to extend income tax cuts passed under former President George W. Bush and set to expire at the end of the year.
The small-business legislation provides $56 billion worth of tax cuts over the next 12 months, with the bulk coming through “bonus depreciation,” which allows companies to more quickly write off the cost of purchases. It also revives stimulus provisions cutting fees and increasing limits on loan guarantees offered by the Small Business Administration.
Community Banks
Another provision creates a $30 billion program in which the Treasury Department would buy preferred shares in community banks, with participants paying the government dividends on a scale depending on how much they increase lending to small businesses. Republicans objected to that part of the legislation, saying it amounted to little more than a smaller version of the Troubled Asset Relief Program.
As a result of the legislation, the administration will be able to release more than $680 million in SBA loans to more than 1,300 businesses.
“When I sign this bill their wait will be over,” Obama said.
The measure will eliminate capital-gains taxes for some small-business investments, and about 4.5 million businesses will be eligible for faster write-off of expenses. Two million people can qualify for a new health-insurance deduction, the president said.
“It means jobs,” Michigan Governor Jennifer M. Granholm, a Democrat, told reporters at the White House after the signing.
She said auto suppliers, struggling with depleted credit, would benefit with hundreds of millions of dollars in new credit being pumped into the state.
The result is that those suppliers may be able to shift into other areas, such as medical devices or alternative energy, potentially creating or retaining 11,000 jobs in the state, she said.
